Meanwhile, the world's financial system appeared to be edging closer to collapse by the day, authorities in Europe and the United States struggling keep banks afloat with injections of cash, nationalizations and mergers of necessity.

The concern was heightened following the rescue of two major European banks and a takeover of Wachovia's bank operations by Citigroup .

Investors also worried that troubles facing the bank sector might worsen the economy's outlook and constrain lending, a key pillar of business and consumer spending and vital for profits.

John Spinello, bond strategist at Jefferies & Co., called the move in both bonds and stocks a "violent" one.

"We're dealing with moment-to-moment dynamic action that's so hard to describe," he said. "Everybody rushed to the bills again."

Earlier Monday, LIBOR, or London Interbank Offered Rate, for 3-month dollar loans had risen to 3.88 percent from 3.76 percent on Friday, suggesting that banks have grown increasingly unwilling to lend to each other. LIBOR for 3-month euro loans, meanwhile, soared to 5.22 percent, the highest rate ever.

These measures of the credit markets, where corporate borrowers go to find loans, indicated that the fear that has been gripping the world's financial system is far from alleviated.

"Right now, banks don't trust one another. This doesn't look to be the end of it," said Axel Merk, portfolio manager at Merk Funds. Even if the rescue package does get approved, it "is a tool that the Treasury can use, but it's not the solution to all the problems out there."

Even before the House vote, the global financial landscape continues to change, keeping large and small investors alike on edge.

Citigroup Inc. acquired Wachovia Corp. in a deal brokered by the government, while Mitsubishi UFJ Financial Group's invested $9 billion in Morgan Stanley for a 21 percent stake in the company.

The mortgage crisis is also ripping through Europe, where there are many large banks whose failures could rock the global financial system. The British government is nationalizing the troubled mortgage lender Bradford & Bingley, while Belgium, the Netherlands and Luxembourg agreed to buy a 49 percent stake in Fortis NV for $16.4 billion.

"In the U.S. anyway, the bailout plan might help to stabilize the system. Now we have to worry about the rest of the world," Merk said. He added that European countries' short-term government debt was also in extremely high demand Monday.

In another move to try to keep the global financial system functional, the Federal Reserve said it was doubling the total amount of cash loans to banks to $300 billion, and making $620 billion available to other central banks through currency swap arrangements, up from $290 billion.